ICE sets out Euronext IPO details

10 June 2014 | 2815 views | 0Source: Intercontinental Exchange

Following receipt of all necessary regulatory approvals, Intercontinental Exchange, Inc. ("ICE") today announces the publication of the prospectus, including an indicative price range, relating to the planned initial public offering ("IPO") of the ordinary shares (the "Shares") of Euronext N.V. ("Euronext" or the "Company"), the pan-European exchange group, in order to establish Euronext as an independent, publicly traded company.

Euronext's ordinary shares are intended to be listed on Euronext Paris, Euronext Amsterdam and Euronext Brussels. Euronext intends to list on Euronext Lisbon after the IPO.

Highlights IPO consists of the secondary sale of part or all of Euronext's ordinary shares held by its shareholder, ICE Europe Parent Ltd, an indirect wholly owned subsidiary of ICE (the "Selling Shareholder") Indicative price range set at €19.00 to €25.00 (inclusive) per Share Euronext valued at €1.33 billion to €1.75 billion on the basis of the indicative price range IPO valued at €880 million to €1,158 million on the basis of the indicative price range and assuming full exercise of the over-allotment option IPO to comprise a public offering to institutional and retail investors in Belgium, France, the Netherlands and Portugal and a private placement to certain institutional investors in various other jurisdictions Up to 10% of the Shares reserved for preferential allocation to eligible retail investors in Belgium, France, the Netherlands and Portugal. Purchase orders for the retail offering will be broken down into two categories: A1 orders (from 10 Shares up to and including 250 Shares) and A2 orders (in excess of 250 Shares). A1 orders will enjoy preferred treatment if not all of the A1 and A2 orders can be fully served Offering of up to 42,108,230 Shares, representing up to 60.15% of the capital of the Company Over-allotment option for up to 10% of the total number of Shares sold in the IPO excluding the employee offering A group of institutional investors (the "Reference Shareholders") have purchased and will acquire an aggregate of 33.36% of the Shares from the Selling Shareholder at a 4% discount to the IPO price, up to a maximum price of €26.00 per Share In addition, certain other institutional investors have committed to purchase in the IPO approximately 2% of the Shares at the IPO price Offer period for institutional and retail investors commences at 9.00 a.m. CET today and is expected to end at 5.00 p.m. CET on 18 June 2014 for the retail offering and at 12.00 noon CET on 19 June 2014 for the institutional offering (subject to acceleration or extension of the timetable of the offering) IPO price and exact number of Shares offered are expected to be announced on 19 June 2014 after the offer period has ended. Prior to allocation, the exact number of Shares offered can be increased or decreased Listing and first trading in the Shares (on an "as-if-and-when-delivered" basis) on the regulated markets of Euronext in Paris, Amsterdam and Brussels under the symbol "ENX" are expected to commence on 20 June 2014. Euronext intends to list on Euronext Lisbon after the IPO and before the fourth quarter of 2014. The prospectus relating to the IPO approved by the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) (the "AFM") on 6 June 2014 is available on the Company's website. Please see "Prospectus" below.

Dominique Cerutti, CEO of Euronext said: "We are delighted to launch the IPO of Euronext with such strong commitment from leading institutions across Europe, a recognition of Euronext's potential as a leading pan-European exchange group. Euronext's role in supporting the real economies of Europe will be further strengthened by our independence and we believe that we are well positioned to develop our markets across Europe, by optimising our underexploited businesses and repositioning as a leading capital raising centre."

Euronext's Strategy as an Independent Company Euronext intends to boost listing, cash trading, derivatives, information services and market solutions & other businesses to further improve liquidity, quality and customer service. Euronext plans to strategically remix its business profile by pursuing product innovation, further asset class diversification and the expansion of its business activities. Pursuing this strategy as a stand-alone company, Euronext intends to: optimise its listing, cash trading and market solutions & other businesses to further improve the efficiency and liquidity of its markets and the quality of its products and the services it offers its customers; re-prioritise the development of its currently underexploited businesses, such as continental equity derivatives and market data products, including through new product expansion; build its ETF franchise; develop its corporate bonds capacity; and streamline its processes, enhance its operational efficiency and achieve cost savings, in respect of which Euronext has identified potential pre-tax operating optimisation and efficiencies of approximately €60 million by the end of the next three years. Of these identified potential operating optimisation and efficiencies, Euronext anticipates approximately one third will relate to reduced IT services costs when LIFFE completes its transition onto the ICE technology platform, which is expected by the end of 2014, and approximately two thirds from IT and non-IT related savings across its businesses. Pursuing this strategy as a stand-alone company, Euronext expects to achieve: a medium- to long-term target revenue compound annual growth rate of approximately 5%, and a medium- to long-term target EBITDA margin of approximately 45%. Euronext has not defined, and does not intend to define, "medium- to long-term". The financial objectives should not be read as indicating that Euronext is targeting such metrics for any particular fiscal year. Euronext's ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond its control, and upon assumptions with respect to future business decisions that are subject to change. Please see "Financial Objectives" below. Euronext's dividend policy is to achieve a dividend pay-out ratio of approximately 50% of net income.

Overview of Euronext

Euronext is the holding company of a pan-European exchange group which operates equity, fixed income and derivatives markets in Paris, Amsterdam, Brussels and Lisbon. Euronext also operates Euronext London as a recognised investment exchange in the United Kingdom.Euronext's business comprises: listing, cash trading, derivatives trading, market data & indices, post-trade and market solutions & other.

As of the date of the prospectus (10 June 2014), the Selling Shareholder owns 100% of the Shares of the Company. Immediately after the closing of the Offering, the Selling Shareholder will continue to own up to approximately 6.0% of the Shares (assuming the full amount of 42,108,230 Shares is sold in the Offering and the over-allotment option is not exercised).

Euronext's Strengths A leading pan-European cash equities listing and trading venue and the premier listing venue in continental Europe as ranked by IPO offering value for the year ended 31 December 2013. The only pan-European exchange with a harmonised regulatory framework, a single order book for its exchanges in Paris, Amsterdam and Brussels and a single trading platform offering access to all markets through a single connection. Sources of revenues are established and diversified across businesses, markets and client segments. Euronext believes it is well positioned for favourable sector dynamics and increasing market activity as the European economy recovers. Recurring revenue streams and resilient and robust free cash flow with low capital requirements. Trading on Euronext markets takes place via the Universal Trading Platform, a multi-asset class, multi-currency trading platform that supports many different regulatory regimes.

Separation of Euronext from ICE

In its current form, Euronext has no operating history as an independent, publicly traded company. From April 2007 until 12 November 2013, Euronext was an indirect wholly owned subsidiary of the NYSE Euronext group and Euronext has been an indirect wholly owned subsidiary of ICE since 13 November 2013.

Euronext in its current form has been separated from ICE based on a well-defined perimeter to enable it to serve customers effectively.

Euronext now includes all of the historical operations of Euronext N.V. that existed prior to the separation and those of its subsidiaries, including the continental Europe cash, derivatives and commodities exchange entities, providing listing, trading and market data services, with the exception of the London-based LIFFE derivatives exchange and related market data services.

The IT services supporting LIFFE's exchanges will be terminated once LIFFE has completed its migration to ICE's technology platform, which is intended to take place by the end of 2014.

Retail Offering and Institutional Offering

The offering will consist of: a public offering to institutional and retail investors in Belgium, France, the Netherlands and Portugal; and a private placement to certain institutional investors in various other jurisdictions, including: within the United States, to qualified institutional buyers as defined in Rule 144A ("Rule 144A") under the U.S. Securities Act of 1933, as amended (the "Securities Act"), pursuant to Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws; and outside the United States, in accordance with Regulation S under the Securities Act.

It is expected that each of the Company and ICE will agree to a lock-up on sales and transfers of Shares without the prior written consent of a majority of the joint global coordinators from the date of the underwriting agreement until 180 days from the closing date of the IPO, in each case subject to certain exceptions.

BNP Paribas is acting as the sole advisor to the Euronext Board of Directors on all matters related to the IPO.

Employee Offering

In addition, the Company is offering up to 328,947 ordinary shares, at a 20% discount to the IPO price, to all of its eligible employees and eligible employees of its majority-owned direct and indirect subsidiaries in Belgium, France, the Netherlands, Portugal and the United Kingdom. The maximum number of ordinary shares in the employee offering represents a value of €5.0 million calculated based upon the IPO price (which will be determined after the offer period has ended). Employees purchasing ordinary shares of Euronext will be subject to lock-up periods in accordance with any applicable local law. None of the joint global coordinators, joint bookrunners and lead managers is participating in the employee offering and none of them assumes any liability or responsibility in connection with the employee offering.

Reference Shareholders

On 27 May 2014, ICE entered into a sale and purchase agreement of ordinary shares in Euronext N.V. with the Reference Shareholders, a group of institutional investors comprised of Avistar SGPS, S.A, an affiliate of Banco Espírito Santo, S.A., BNP Paribas S.A., BNP Paribas Fortis SA/NV, ABN AMRO Bank N.V. through its subsidiary ABN AMRO Participaties Fund I B.V., ASR Levensverzekering N.V. (a company of the ASR Nederland group), Caisse des Dépôts et Consignations, Bpifrance Participations, Euroclear SA/NV, Société Fédérale de Participations et d'Investissement/Federale Participatie- en Investeringsmaatschappij, Société Générale and BancoBPI Pension Fund represented by BPI Vida e Pensões - Companhia de Seguros, S.A. Pursuant to the share purchase agreement, the Reference Shareholders have purchased an aggregate of 33.36% of the issued and outstanding ordinary shares from the Selling Shareholder at a 4% discount to the IPO price, up to a maximum price of €26.00 per ordinary share. Each Reference Shareholder has agreed not to sell any of the ordinary shares it has acquired pursuant the sale and purchase agreement for a period of three years from the pricing date of the IPO. This transfer restriction will not apply to any transfers to (i) affiliates of a Reference Shareholder, (ii) another Reference Shareholder, and (iii) a third party with the unanimous consent of the Reference Shareholders (subject to the consent of the relevant regulator(s)), in each case, provided that the ordinary shares transferred will remain subject to the transfer restriction and the other terms and conditions of the reference shareholders agreement. In view of the fact that the Reference Shareholders as a group acquired more than 10% of the issued ordinary shares of Euronext, they have received declarations of no-objection or similar approvals from the respective competent national supervisory authorities in France, the Netherlands, Belgium, Portugal and the United Kingdom, as required under applicable law.

Prospectus

The prospectus relating to the IPO includes detailed information about Euronext and the IPO. Any decision to purchase Shares in Euronext should be made solely on the basis of the prospectus. The prospectus is available to the public, subject to securities law restrictions in certain jurisdictions, on Euronext's corporate website at www.euronext.com/ipo.The approval of the prospectus by the AFM does not constitute an appreciation of the soundness of the transactions proposed to investors. The prospectus has been passported by the AFM to the competent authorities in France (the Autorité des marchés financiers), Belgium (the Financial Services and Markets Authority) and Portugal (the Comissão do Mercado de Valores Mobiliários) for the purposes of the retail offering and contains summaries in the English, French, Dutch and Portuguese languages.

Financial Objectives

The financial objectives are internal objectives against which Euronext measures its operational performance and they should not be regarded as forecasts or expected results or otherwise as a representation by Euronext or any other person that Euronext will achieve these objectives in any time period. The financial objectives are based upon the assumption that Euronext will be successful in executing its strategy as a stand-alone company, as well as the assumption that there will not be any material adverse change in underlying market and macroeconomic factors, including: (i) trading volumes for the different products Euronext offers; (ii) Euronext's market share in the businesses in which it competes; (iii) the level of pricing of its products and services and the development of such pricing; (iv) trends in its cost levels and the cost levels required to support its expected level of activity and revenues; (v) the development of Euronext as an independent, publicly-listed entity; (vi) the macroeconomic environment in which it operates; (vii) the development of its industry in general; and (viii) its business, results of operations and financial condition. As a result, Euronext's actual results may vary from the financial objectives, and those variations may be material.

Non-IFRS Measures

This announcement contains references to EBITDA margin, which is not required by, or presented in accordance with, International Financial Reporting Standards ("IFRS"). Euronext defines EBITDA margin as operating profit before exceptional items and depreciation and amortisation, divided by total revenue. EBITDA margin is a non-IFRS measure and is not audited. EBITDA margin should not be considered as an alternative to, or more meaningful than, and should be read in conjunction with, operating profit before exceptional items.

Risk Factors

Investing in the Shares of Euronext N.V. involves certain risks. A description of these risks, which include risks relating to the Company's business and industry, the IPO and the Company's ordinary shares, is included in the prospectus relating to the IPO.